Renaming Synergy Drive to Sime Darby – merger or reverse takeover?


by Mendela

Some one e-mailed me the below:

I have been curious to find out the reason for the renaming of Synergy Drive to Sime Darby after the merger. By renaming the merged entities, it seemed more like a takeover.

The followings may offer some reasons which weren’t published in the mainstream papers.

1. Was it really a merger or was it a reversed takeover of Golden Hope and Kumpulan Guthrie by Sime Darby? We were told that this was a merger of equals. It’s now obvious that it was called a merger “to enable PNB to vote at the EGM. If it was called a takeover, it would be deemed to be a related party transaction and PNB would have to abstain from voting;

2. A takeover was evident when the new merged entity is called Sime Darby (SD) Berhad. Synergy Drive (SD) was it’s temporary name during the “takeover” exercise;

3. Did the promise to create the world’s largest listed oil palm plantation company really happen? Can the “new” Sime Darby be called a plantation company when only 47 per cent of revenue is contributed by plantation activities?;

4. Have the stakeholders, in particular the PNB, been “taken for a ride” with the promise to establish the world’s largest listed oil palm plantation but ended up still with a diversified company?;

5. Will another clever and well-connected “orang tengah” (middleman) copy the hugely profitable CIMB’s money making scheme to propose another round of reorganization of Sime Darby so that more commissions and quick capital gains could be made?;

6. Who would be the lucky buyers of Sime Darby’s non-plantation assets should a further break-up of this PNB-controlled company be mandated by the power-that-be?;

7. The initial market reaction to the takeover has been positive. When listed on Nov. 30, Sime Darby shares rose 23.6 per cent or RM2.10 to RM11. But will the long-term assessment change now that the promise to create a truly gigantic plantation company has not materialized?;

8. Will other PNB assets be acquired by other “orang tengah” — middlemen– to force another mega merger or takeover on the pretext of business rationalization and economies of scale when the real reason is fee income and quick capital gains?;

9. It is incumbent upon the PNB, in particular its chairman Tan Sri Ahmad Sarji, to guarantee that PNB and its millions of unit trust investors are not taken for a ride;

10. For its shrewd “orang tengah” role, Synergy Drive (CIMB) is believed to have turned its modest invest in the venture (or adventure) into fee income and shares worth hundreds of millions of Ringgit. Not bad for a year’s work;

11. Who is the mystery “non-Bumiputera” market maker who is said to have been responsible for successfully selling this merger idea to the Umno-led government?;

12. Will more Bumiputera assets held in custody by PNB and other Bumiputera trust agencies be “surreptitiously tranferred” to government-linked companies (GLCs)?;

13. In recent years, Bumiputera objectives of trust agencies and companies have given way to profits and market capitalization at most GLCs;

14. What will happen to the staff on the enlarged Sime Darby in the long run? When the sale of business agreement was signed, everyone was promised at least one year of guaranteed employment. When job offers were made, they were offered one year to three years “contracts”; and

What about morale? There have been allegations that those putting together the takeover “have no respect for seniority ” and that the staff of the “dead” Holden Hope and Kumpulan Guthrie alienated.

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  1. #1 by Loh on Friday, 4 January 2008 - 8:19 pm

    What is the total equity share capital of Sime Darby Berhad as included in the EPU computation, and the percentage share of SDB in total equity capital of limited companies? What is Malays’ percentage ownership of equity share in Sime Darby Berhad?

  2. #2 by sheriff singh on Friday, 4 January 2008 - 8:30 pm

    Same idea as turning “UMNO Baru” into “UMNO” (lama), a new entity claiming it is actually a continuation of the “old” entity.

    In Sime Darby “Baru”, did PNB break the Takeover Code and other pertinent laws? If so, will they be brought to book by the powers there be? Or will they be excused because they had the “Approvals” of all the regulatory bodies, in which case will these regulatory bodies themselves have broken their own codes?

    But I suppose in Bolehland everything has been “kow-timmed”. No further action.

    Perhaps the Minority Shareholders Watchdog Group (MSWG) and the Integrity and Corporate Governance Institutes would care to comment?

  3. #3 by undergrad2 on Friday, 4 January 2008 - 8:48 pm

    Where is Din Merican?

  4. #4 by sheriff singh on Friday, 4 January 2008 - 8:50 pm

    Cambodia?

  5. #5 by Jong on Friday, 4 January 2008 - 9:15 pm

  6. #6 by izrafeil on Friday, 4 January 2008 - 9:53 pm

    companies run by M_l_ys are at best mediacore, compare sime to say IOI, and even smaller company Lam Soon, these companies have gone downstream (where the money is) years ago, sime is stuck into upstream plantations…. Has anyone seen Lam Soon speciality fat factory in China? state of the art…..

  7. #7 by HJ Angus on Friday, 4 January 2008 - 10:04 pm

    One good thing about the merger is that the price has increased so guess minority s/h are not complaining.

  8. #8 by iweepformalaysia on Friday, 4 January 2008 - 10:32 pm

    Good, when politics meets business.

    I have not been looking forward towards the so-called “largest public listed plantation corporation” even when the idea was placed on the table. First of all, Synergy Drive, or maybe we should call it ex-Synergy Drive’s business is, and only is palm oil. It is a risky gamble if you look it from the economic point of view. They are gambling on the price of crude palm oil, although is currently increasing, but is facing a tough opposition from EU and US.

    Secondly, do you seriously think that Malaysia has the ability to manage a mega conglomerate? Merging everything into a single entity does not equal to increasing return to scale. Malaysia already has plenty of failures as examples, which i think there is no need to cite them.

    Can we stop BN from ruining our economy and businesses?

  9. #9 by cancan on Friday, 4 January 2008 - 10:58 pm

    I have said it many times.

    The day the Umnoputras know how to manage the country with dignity and competency is the day the sun rises from the west and Malaysia will be at its best.

    The Umnoputras are manipulating the rule of laws to suit their taste.
    They do not give a damn about the country and rakyat.

    Never ever trust these evildoers.

  10. #10 by HJ Angus on Friday, 4 January 2008 - 11:02 pm

    I guess PNB chose SD as the main company because all the other 2 companies were more plantation companies.

    It should take a rocket scientist to get some interesting cost reductions especially on the HQ staff as I think 25% of them are redundant.

    What bothered me was that PNB did not undertake the re-structuring itself and reduce the M&A fees.
    Maybe there was too much sentiments to be bargained so let outside party do the hatchet work.

    Let us see what the first year results are like.
    I sold one lot Golden Hope at RM6 about nine months ago but kept one lot to see SD open around RM9 so guess I will keep it until RM13…..

  11. #11 by waterfrontcoolie on Friday, 4 January 2008 - 11:05 pm

    This gonna be a repeat of the ‘glorious’ days when KN was formed to be the largest container haulage company around. They would quote that the US hualage companies are large if not larger but they forgot the basic set-up of driver-owner concept. Finally, all the original big ‘five’ collapsed when the sector was opened up!
    Could this be a repeat of the same mentality? Big is good for the ego of the Managers who are emplaced in such positions!!

  12. #12 by smeagroo on Saturday, 5 January 2008 - 12:11 am

    minority shareholders make abit happy. I mean i m not complaining as i hold GHope shares. But who gained the most from this?

    CIMB made how much? ANyone knows?

  13. #13 by sidney x on Saturday, 5 January 2008 - 12:24 am

    I heard even the bonus-es are different. Thus some resigning from Sime Darby. Which is odd. Monetary wise, it appears that Guthrie seems to be getting a better piece of the cake. I personally think it looks more stitched up effort to just get the largest plantation company against another local non-Bumi plantation company.

  14. #14 by mendela on Saturday, 5 January 2008 - 12:26 am

    Dear Kit, I wish to clarify, this article is not written by me, it is an e-mail sent to me from an unknown friend. I did mention this very fact in the first sentence of the article too.

    [Yes, this was mentioned in the first sentence. - kit]

  15. #15 by HJ Angus on Saturday, 5 January 2008 - 12:50 am

    sorry typo:

    It should NOT take a rocket scientist to get some interesting cost reductions especially on the HQ staff as I think 25% of them are redundant.

  16. #16 by budak on Saturday, 5 January 2008 - 8:41 am

    another Tongkat Billionaire in the making…
    else who going to support BN leh…

  17. #17 by iweepformalaysia on Saturday, 5 January 2008 - 9:00 am

    As i reside overseas, i just found out that cooking oil in Malaysia has been rationed, which will then going for price increase. How many cooking oil are derived from palm oil? Are all these just mere coincidence?

  18. #18 by Jan on Saturday, 5 January 2008 - 12:48 pm

    Smeagroo, CIMB were not paid in cash but in kind, 50 million SD shares! This we were told at Sime’s last AGM.
    At today’s price its about 600-700 mllion ringgits. Probably the highest payout in Malaysian corporate history for the merger work.
    Have you not started to accumulate CIMB shares?

  19. #19 by Jonny on Saturday, 5 January 2008 - 5:44 pm

    Neat M&A work here. Another smart move by Fourth Floor to takeover, and then ‘pork-chop’ all the nice meat.

    And distribute and sell to foreign interests. We shall see …

  20. #20 by greenacre on Saturday, 5 January 2008 - 9:00 pm

    They made sime bank into pauper bank. Now they are into plantation. Perhaps someone is thinking of sahara in the middle of Malaysia.

  21. #21 by madmix on Sunday, 6 January 2008 - 12:09 pm

    UMNOpreuneurs are good for wheeling dealing, merging this and that taking over this and that: but creating shareholder value is not their strength. Their companies hardly grow organically and if there is any increase in revenue, this is usually due to some sweetheart deals from the government. That is why I never invest long term in such companies, just trading for short term gains. Their management is usually third rate with poor grades in all departments from marketing to manufacturing. Exceptions are CIMB, MAS and one or two others.

  22. #22 by littlefish9 on Friday, 14 March 2008 - 9:55 pm

    Please review 30% Bumiputra employment quota on Multinational company. Presently, it is very difficult to get qualified & competent bumiputra engineers & managers. Can they leave the MNC alone?

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